China NiCoLi Summit 2020: Cobalt raw materials supply uncertainty remains, global cobalt demand to revive in 2021-2022

Published: Jul 14, 2020 15:35

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China’s imports of cobalt raw materials are expected to fall 4% year on year to 86,000 mt in metal content in 2020, said Huo Yuan, cobalt senior analyst at SMM, citing coronavirus-induced uncertainty around raw materials supply from Africa and reduced supply after Glencore placed its Mutanda mine in the Congo on two-year care and maintenance.

SHANGHAI, Jul 14 (SMM) – China’s imports of cobalt raw materials are expected to fall 4% year on year to 86,000 mt in metal content in 2020, said Huo Yuan, cobalt senior analyst at SMM, citing coronavirus-induced uncertainty around raw materials supply from Africa and reduced supply after Glencore placed its Mutanda mine in the Congo on two-year care and maintenance.

China’s imports of cobalt raw materials in 2019-2020E (Source: SMM)

End-users demand has been subdued due to the COVID-19 impact, but consumption will revive in the 2021-2022 period given optimistic prospects for demand recovery after the pandemic, Huo told delegates at the 5th China International Nickel Cobalt Lithium Summit, which is organised by SMM in Ningbo, Zhejiang province on July 14.

In the cobalt sulphate market, inventories in China started to accumulate in December 2019, but demand and supply fundamentals may improve in H2 2020 amid supply uncertainty of cobalt raw materials and the recovery of downstream demand, said Huo.

China’s cobalt sulphate demand and supply balance in 2019-2020E (Source: SMM)

The analyst expected China’s cobalt (II, III) oxide market to continue destocking in H2, after stocks began to slide in June.

She estimated a rise of 15% in China’s lithium cobalt oxide (LCO) supply in 2020, bolstered by a rise in demand from 5G smartphones and tablets as the trend of online classes gains steam. Development of downstream sectors of high-voltage/capacity battery, e-cigarette, drone, TWS headphone and smart home appliance will also push domestic production of LCO.

The global cobalt raw materials market will likely achieve a balance of demand and supply by 2025, and destocking trend is expected after that, said Huo.

Global supply of cobalt raw materials in 2018-2022E (Source: SMM)

SMM assessed the average price of refined cobalt in China at 251,000 yuan/mt in 2020.

Global demand for cobalt in 2020 is estimated at 139,000 mt in Co content, up 2% year on year. Lithium-ion battery market may account for 61% of the global demand for cobalt in 2022.

Global demand for cobalt by downstream sector in 2018-2022E (Source: SMM)

China NiCoLi Summit 2020 Cobalt Cobalt raw materials LCO lithium cobalt oxide cobalt (II III) oxide

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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